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Digitize logistics to cut costs of goods

The cost of goods in the country would be lower should companies incorporate digital technology in the supply chain.

At the virtual National Export Congress 2020, Supply Chain Management Association of the Philippines president-elect Pierre Carlo Curay noted that 80 percent of the processes in the local supply chain are not digitized.

About 43 percent are highly analog and manual, while 35 percent of digitized process applies low to medium digitalization.

Of the supply chain processes, fleet management and customer services have no digitized processes.

“The Philippines is lagging behind other Asean (Association of Southeast Asian Nations) neighbors like Singapore, Thailand, and Indonesia in digitalization. In fact, these countries are gearing up for future logistics,” Curay said.

He added that the country has the highest share of logistics cost on retail cost among its ASEAN peers.

Logistics cost in the Philippines accounts for 27 percent of the retail price of goods compared to Thailand at 11 percent, the CMAP chief said.

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“It’s expensive to deliver goods here compared to Singapore, Indonesia, Vietnam, and Thailand,” he said.

He added that the digitalization of supply chain processes, particularly logistics, would “greatly reduce” the cost of products in the domestic market.

Curay said the government and the industry target to reduce the share of logistics cost to retail cost from 27 percent to 15 percent, and achieve the regional average of 11 percent.

Curay added that the government should accelerate digitalization in the Bureau of Customs, which processes has multiple steps that are adding to the complex local supply chain.

He said it takes three weeks up to a month to release a shipment at the Customs.

Digitalization on logistics, Curray said, would cut lead times, show order status transparency, and give rise to technology-driven new entrants and disrupt the traditional supply chains.